SPS Commerce (NASDAQ:SPSC) executives highlighted the company’s 100th consecutive quarter of revenue growth while describing a year shaped by customer spending scrutiny and tariff-related uncertainty, according to remarks on the company’s fourth-quarter 2025 earnings call.
Chief Executive Officer Chad Collins said SPS delivered “solid fourth quarter and full year results,” even as a “challenging macroeconomic backdrop” and uncertainty around tariffs contributed to delayed purchasing decisions during 2025 and continued to affect customers in the fourth quarter.
Fourth-quarter and full-year results
For the full year, Nelson said revenue grew 18% to $751.5 million and recurring revenue increased 20%, with recurring revenue growth “driven by fulfillment growth of 22% year-over-year,” according to Collins. Adjusted EBITDA for 2025 increased 24% to $231.4 million.
Nelson also provided customer and balance sheet metrics for the year:
- Total recurring revenue customers of approximately 54,600, with 1P customers flat sequentially and 3P customers down by 350.
- Annual ARPU of approximately $14,350.
- Year-end cash and cash equivalents of $151 million.
On capital allocation, Nelson said the company used 76% of free cash flow to repurchase $115 million of shares in 2025. She added that the board approved an additional $200 million increase to the repurchase program effective Dec. 1, 2025, bringing total authorization to up to $300 million.
Revenue recovery, Carbon6, and customer examples
Collins emphasized SPS’s expansion into revenue recovery solutions following its acquisition of Carbon6 in 2025, building on the prior-year acquisition of SupplyPike. He described revenue recovery as a “$750 million addressable market across 1P US sellers” and a cross-selling opportunity within SPS’s network.
Management cited several customer examples tied to revenue recovery adoption, including Allstar Innovations, CyberPower Systems, Outdoor Cap, TaylorMade, eos, and Bunge. Collins also highlighted longer-standing network relationships and deployments, including Wolverine Worldwide’s expansion into Europe with fulfillment across more than 300 trading partners.
Additional examples discussed on the call included:
- Trader Joe’s rolling out EDI requirements across its vendor base, with SPS helping the retailer “accelerate progress toward 100% vendor compliance.”
- Gempler’s switching to SPS to improve order automation and support omni-channel growth, including increased EDI compliance “from 3 to nearly 100 vendors,” according to Collins.
- Petco using SPS’s retailer management solution to transition more than 700 suppliers to standardized digital supply chain requirements, which Collins said reduced manual reconciliation and improved tracking.
In the Q&A, Nelson said fourth-quarter revenue landed at the lower end of guidance, while adjusted EBITDA finished at the higher end. She attributed revenue softness to a continuation of previously discussed headwinds among existing customers, including “invoice scrutiny” and broader uncertainty.
Nelson also pointed to dynamics within revenue recovery. While she said demand was strong, she noted that with the company’s take-rate model, results came in “more to the lower end” of expectations, alongside “Amazon policy changes that have occurred.”
AI product launch and planned monetization approach
Collins discussed the launch of new “agentic capabilities” embedded into the SPS supply chain network called Max, describing it as AI functionality drawing on “hundreds of thousands of trading connections,” proprietary intelligence, and billions of transactions.
In response to an analyst question, Collins outlined three initial Max features within the fulfillment product:
- A chat feature for guided workflows and inquiries about retailer requirements.
- A monitor capability intended to detect anomalies in transaction activity across the network.
- Agent-to-agent communication enabled through a Model Context Protocol (MCP) interface.
Collins said Max is available to beta customers and that SPS is using customer usage during the beta period to inform a monetization strategy. He said he believes Max will be a “competitive differentiator” and support retention, and added SPS expects to extend Max across its product portfolio over time.
Collins also said the company conducted a live demo showing agent-to-agent communication connecting SPS network data with an ERP partner’s data via a large language model interface. He indicated the company expects to monetize this type of access over time and said, “I think we will price the MCP access.”
2026 guidance and margin commentary
Nelson provided guidance for the first quarter of 2026 calling for revenue of $191.6 million to $193.6 million, or about 6% year-over-year growth at the midpoint, and adjusted EBITDA of $55.5 million to $57.5 million. She guided GAAP diluted EPS of $0.46 to $0.49 and non-GAAP diluted EPS of $0.95 to $0.99.
For full-year 2026, Nelson guided revenue of $798.5 million to $806.9 million, representing about 7% growth at the midpoint, and adjusted EBITDA of $261 million to $265.5 million, implying growth of about 13% to 15% over 2025. Full-year GAAP diluted EPS guidance was $2.50 to $2.58, with non-GAAP diluted EPS of $4.42 to $4.50. Nelson said investors should model an effective tax rate of about 30% on GAAP pre-tax net earnings for the remainder of the year on a quarterly basis.
During Q&A, Nelson said the company expects to “lap” 2025 headwinds by the end of the first half of 2026, including downsell activity that began in the latter part of the second quarter of 2025. She also said enablement campaigns would likely contribute more to customer count later in Q2 and into Q3 due to the timing of program completion and when customer billing begins.
On profitability, Nelson said SPS expects about two points of adjusted EBITDA margin expansion in 2026, with the largest component coming from gross margin improvements tied to efficiencies from prior investments in customer experience. She added the company also sees opportunities in sales and marketing and G&A, while describing R&D spending as appropriate as a percentage of revenue.
Leadership and governance updates
Collins said Nelson intends to retire after nearly 20 years at the company, and he announced that Joseph Del Preto will assume the CFO role as of March 16, 2026. Collins said Del Preto previously served as CFO and Treasurer of Sprout Social and that Nelson will remain with SPS through the transition.
Collins also said the company added two new independent directors and entered into a cooperation agreement with Anson Funds following engagement with large investors. In closing remarks, he said SPS’s “reimagined retail go-to-market strategy” is enabling more strategic retailer conversations and cross-selling opportunities. Collins added that the company believes its growth levers support “revenue growth expectations of at least high single digits without acquisitions beyond 2026” and said SPS expects to increase adjusted EBITDA margin by 2 percentage points annually while remaining committed to free cash flow generation and share repurchases.
About SPS Commerce (NASDAQ:SPSC)
SPS Commerce, Inc is a leading provider of cloud-based supply chain management solutions that enable seamless collaboration between retailers, suppliers and logistics providers. Through its robust network, SPS Commerce connects trading partners with electronic data interchange (EDI) capabilities, helping businesses automate order processing, inventory management and fulfillment workflows. The company’s platform ensures data accuracy, accelerates order-to-cash cycles and reduces manual intervention, supporting a wide range of industries including retail, grocery, consumer goods and automotive.
The company offers a suite of services encompassing EDI, retail-ready compliance, order management and data analytics.
